Print

Email story

Comment

Email editor

Talk of the bay

Sykes is advised to make use of its excess cash

By SCOTT BARANCIK
Published September 12, 2005

Sykes Enterprises has long boasted an enviable balance sheet. The Tampa customer service company has almost no long-term debt and more than $100-million in cash on hand.

Is having that much mad money a good thing for shareholders? Not necessarily, according to SmartMoney.com. "Studies show that corporate bosses are, on average, lousy stewards of big cash sums," the Web site says. "Money that doesn't go toward dividends, share buybacks or debt repayment is at risk of being spent on "empire building.' "

That's not to say Sykes shouldn't brag. It is one of only eight publicly traded companies SmartMoney.com identified as having four key features: cash equal to 20 percent or more of its market value, positive free-cash flow, little debt and projected earnings growth. Some other qualifiers include EarthLink, Imation and Integrated Device Technology.

But the Web site suggests Sykes and the others - it calls them "Use It or Lose It" stocks - do something with their excess cash, such as issue a large dividend to shareholders or buy back a big chunk of stock.

"If Sykes' management makes wise use of those funds," the Web site said, "the company's shares have further to climb."

Sykes' stock is already on an upward trajectory. It closed Friday at $11.45 a share, its highest level since December 2001.

[Last modified September 9, 2005, 21:00:05]